Exxon Funds Litigation Research, Gets Reduced Damages

ExxonMobil has already come under scrutiny for funding global warming deniers, but the company has also funded research that raises concerns about conflict of interest in litigation research. The company began funding litigation research after being hit with punitive damages for the Exxon Valdez oil tanker spill, and then cited that research in an appeal that ultimately reduced those damages by $2 billion.

A brief history of the case is as follows: On March 24, 1989, the Exxon Valdez oil tanker left the terminal in Valdez, Alaska heading south through Prince William Sound. It contained 52 million gallons of oil. The tanker was captained by Joseph Hazelwood, who had gotten permission to change course in order to avoid icebergs. The vessel hit a reef and began dumping oil along the Alaskan coastline. Estimates of oil released into to the Alaskan ecosystem range from about 10.8 (the official count) to 30 million gallons. The oil spill affected about 1500 miles of the Alaskan coastline.

The probable causes for the spill include: 1) failure of the third mate, because of fatigue and excessive workload, to properly navigate the vessel; 2) impairment of the captain because of alcohol; 3) failure of the Exxon Shipping Co. to provide sufficient crew; 4) inadequate equipment resulting in ineffective vessel traffic service.

In 1994 an Anchorage jury found Exxon guilty and awarded $287 million in actual damages to fisherman and local residents and $5 billion for punitive damages, which the court stated was not unconstitutionally excessive. The latter was based on Exxon’s profit in 1989. Exxon appealed the ruling and the 9th U.S. Circuit Court of Appeals ordered the original judge to reduce the amount of punitive damages, which he did on December 2002 to $4 billion. Exxon appealed again and the original judge increased the punitive damages to $4.5 billion. Finally, Exxon was able to get the amount reduced to $2.5 billion by the 9th U.S. Circuit Court of Appeals.

After the first punitive damages were awarded, Exxon began seeking out academic researchers who would publish articles with a particular outcome, namely, that juries are not competent in awarding punitive damages. They cited several of the articles in appeal but did not disclose that they funded the research.

To quote William Freudenburg, one social scientist who was approached but did not accept Exxon’s offer:

A large corporation facing a multibillion dollar court judgment quietly provided generous funding to well-known scientists (including at least one Nobel Laureate) who would submit articles to “open,” peer reviewed journals, so that their ‘unbiased science’ could be cited as an appeal to the Supreme Court.

Professor of Law Richard Lampert at the University of Michigan was quoted in a Los Angeles Times article on the subject: “It is very troublesome that work published as scholarship…is being vetted by lawyers. It was designed to serve Exxon. It was not done because they wanted to know how juries behaved.”

Exxon’s lucrative research contracts to academia clearly paid off, possibly with a $2 billion premium. This is an example of why journals and book publishers must adopt disclosure policies so that judges and juries will be able to understand which research was designed with a particular outcome in mind—advocacy research—in contrast to research that is not contracted out by a litigant for the purpose of lowering punitive damages.